The Israeli start-up and tech scene have been a hub for innovation and growth. However, the tech scene is at a time of flux and change. The major sectors to watch out for in the Israeli tech include innovations in blockchain, AI, medical cannabis and advanced manufacturing.
In terms of what’s in store for Israeli in 2019, “The main difference between 2018 and 2019 will be the sectors of interest to investors”, says Haggai Ravid, CEO of investment firm Cukierman & Co. based in Tel Aviv. “We believe certain sectors will go out of vogue and other sectors will become trendy. For instance, the hype around crypto and digital could be replaced by the cannabis trend. Deep-tech, cybersecurity and fintech are big in Israel too.”
For the past fifty or so years, USA has been the primary source of investment for companies in Israel. In 2019, it is likely USA will maintain this status. However, USA seems to have a growing interest in M&A or merger and acquisitions. In terms of how this plays out in the market, the USA is likely to have an increased focus on mature companies.
Another key trend is Israel’s growing interest in the far east. Israeli entrepreneurs have increasingly been turning towards markets in Asia, including Japan, China, Singapore and Hong Kong. The sources of funds for Israeli companies is on the road to diversification in 2019 as European countries continue to focus on recovering from economic issues.
It’s hard to talk about trends in investment without talking about China. Jack Ma, the Founder of the Chinese e-commerce giant, made two trips to Israel in 2018, highlighting the growing importance of Israel-China economic relations. At an Innovation Summit in Tel Aviv in 2019, Ma said, “In Israel innovation is everywhere, like water and food, it’s so natural.”
Since 2014, overall Chinese investment in Israeli venture capital funds has gone down. However, according to IVC Research Center, a Tel Aviv-based company, investment activity in Israeli tech start-ups, especially in the field of life-sciences and software, has increased in the past two years. If you look at the numbers, six of the 17 largest funding deals in Israel were funded by Chinese investors in 2018.
In terms of trends for 2019, Israel might be the country to step up as the trade bridge between China and the US with the ongoing trade war. As a result, Chinese investors could look towards Israel for further funding and investment opportunities.
With an increasing interest in emerging markets, 2019 might also be the year the Israeli tech and start-up sector ramps up its ties with Africa and Latin America. The demand for Israeli agri-tech and cleantech technologies has been on the rise in Latin American countries.
According to Ravid, “The close tie between Israel and Brazil is expected to encourage investment in Israeli high-tech, and early initiatives in the field are already gaining momentum.”
While it’s impossible to accurately predict how 2019 will pan out for the Israeli tech sector, there seem to be many opportunities ahead for Israeli companies looking to expand its horizons.